USD/JPY: Potential For a New Low

  • Euro Testing 1.3900
  • Japanese Yen Reverses at Fibo
  • British Pound Diagonal From 2.0043?
  • Swiss Franc Targets Break of 1.1800
  • Canadian Dollar To Test 1.0340
  • Australian Dollar Working Towards Fibo Resistance
  • New Zealand Dollar 5 Waves Up from .6824


Commentary: The last two days comments on the EURUSD have started out with “there is no reason to change the outlook at this point for a new high (above 1.3852)?”. Still, we had favored a bigger pullback in hopes that those on the sidelines could get in at a favorable reward/risk ratio. However, the EURUSD continues to rally and is approaching the 1.3900 figure. Measured resistance is at 1.3910 (100% extension of 1.3360-1.3719/1.3551). There is potential for a rally to the 161.8% at 1.4132 as well, but likely next week. See our special technical report on the EURUSD from Friday at EURUSD 1.40 for more analysis.

Strategy: Remain bullish, move risk to 1.3824 (from 1.3663), no target?we?ll keep moving up the stop until we are stopped out

Commentary: We wrote yesterday that “a small triangle has unfolded following the rally from 112.59. Look for a terminal thrust from the triangle to test the 61.8% of 115.63-112.59 at 114.47 before a top and reversal. The larger bearish bias is strong as long as price is below 115.63. We expect a drop under 112.59 following a top and reversal near 114.47.” The USDJPY reversed at 114.38 and a bearish bias is warranted against there targeting a drop below 112.59.

Strategy: Bearish now, against 115.63, target below 112.59

Commentary: While the EURUSD marches higher, Cable is shuffling higher. We proposed yesterday that the pair might be ready to accelerate higher in a 3rd wave from 2.0235. The lack of upside acceleration makes confidence in this pattern low right now though. A bullish bias is warranted above 2.0285 but we would like to introduce an alternate pattern. The wedge shape of the rally from 2.0043 could be an ending diagonal in wave C within an A-B-C from 1.9651. It is also possible that the diagonal is wave i within a 5 wave bullish cycle from 2.0043. Either way, a pullback to at least 2.0235 is expected.
Strategy: Remain bullish, move risk to 2.0285, target above 2.0654

Commentary: The count that calls for a new low (below 1.1815) continues to track well as the USDCHF traded as low as 1.1817 this morning. Continue to favor the downside and a break of 1.1815. A bearish objective is at 1.1793 (161.8% extension of 1.2215-1.1993/1.2151). Still, this decline from 1.1898 is wave 5 in the 5 wave decline from 1.2151 so risk of an upward correction back to 1.1900 or so increases with every tick lower.
Strategy: Remain bearish, move risk to 1.1879, target 1.1795

Commentary: The break of the head and shoulders neckline is real. We wrote about the neckline break yesterday and also mentioned that “the decline from 1.0591 looks impulsive. Favor the downside for a test of 1.0340 as long as price is below 1.0591.” 5 waves lower appear complete from 1.0591 so a bounce to the former 4th wave at 1.0445 is expected before the next move lower. Where this 5 wave decline fits in the larger structure is not completely clear but 5 waves down is evidence that the trend is down and that rallies should prove corrective. Additional resistance is the 61.8% of 1.0591-1.0394 at 1.0516. Favor the downside as long as price is below 1.0591 for a test of 1.0340.
Strategy: Flat

Commentary: We wrote yesterday that “the pattern since the 8/27 high at .8333 is certainly corrective but so is the rally leg from .7673 to .8333. The evidence suggests that a large complex correction is unfolding and that there will be one more rally leg (above .8333).” The Aussie has pushed through .8333 and the next level of potential resistance is at the 61.8% of .8870-.7673 at .8413. Near term support is .8324. A corrective decline to this level would warrant a bullish stand against .8171.
Strategy: Flat

Commentary: The Kiwi structure is unfolding as expected. That is, the rally from .6824 is impulsive (5 waves), indicating additional upside potential. The sideways consolidation that has taken place since last night is most likely a small 4th wave that will lead to a slight new high. A small correction is then expected but the trend is up unless .6824 is broken.

Strategy: Remain bullish, against .6824, target above .7272
JTRENDW uses 13 week RSI in order to gauge strength of trend. The trend is considered Bullish if the indicator registers a reading above 60. The trend is considered Bearish if the indicator registers a reading below 40. If the reading is between 40 and 60, then the reading is Flat. The JTRENDD uses 13 days of data. An example of JTRENDW is below for the EURUSD.